Corporate Restructuring, Valuation and Insolvency · Convening and Conduct of Meetings of Committee of Creditors

Voting Rights and Decision Making in the Committee of Creditors

Updated 11 October 2026 · Fact-checked

Only financial creditors vote in the committee of creditors. Each votes in proportion to the financial debt owed to it. Most decisions need not less than 51% of the voting share. Approval of a resolution plan needs 66%. Class creditors vote through an authorised representative. Compute each creditor's share, apply the threshold, then check who may vote.

Understand Voting Rights and Decision Making in CoC

The committee of creditors (CoC) is the body that takes the commercial decisions in a corporate insolvency resolution process. Under section 21, it comprises all financial creditors of the corporate debtor. Operational creditors, directors and partners may be given notice and may attend in the way section 24 allows, but they have no vote.

Voting is not one creditor, one vote. Under section 24(6), each creditor votes in accordance with the voting share assigned to it, based on the financial debt owed to it. The resolution professional determines the voting share in the manner specified by the Board (section 24(7)). A bank owed a larger sum therefore carries more weight than a bank owed a smaller sum.

Some creditors cannot vote at all. Under the first proviso to section 21(2), a financial creditor that is a related party of the corporate debtor has no right of representation, participation or voting. There is a narrow exception for a financial creditor regulated by a financial sector regulator, where it is a related party solely because of conversion or substitution of debt into equity, or other prescribed transactions, before the insolvency commencement date.

The default rule is in section 21(8): save as otherwise provided in the Code, all CoC decisions are taken by a vote of not less than 51% of the voting share of the financial creditors. Some decisions need a higher majority. Approving a resolution plan needs 66% of the voting share. A withdrawal application under section 12A needs 90%. Learn these three numbers as a set.

Where there are many financial creditors in a class, such as debenture holders, depositors or home buyers, they do not each sit in the CoC. An authorised representative attends and votes for them (section 21(6A)). Section 25A sets out how that representative must vote. This is a favourite area for case-based questions.

Key rules to remember

Voting share: Voting share of a creditor = (Financial debt owed to that creditor ÷ Total financial debt owed to the creditors who vote) × 100; Section 24(6) and (7): voting follows financial debt, and the RP determines the share as the Board specifies. A creditor with no vote, such as a related party, is not a voting creditor. The exact computation follows the Board's regulations.
General CoC decisions: Vote of not less than 51% of the voting share of the financial creditors; Section 21(8). It applies save as otherwise provided in the Code. The test is on voting share, not on the number of creditors or those present.
Resolution plan approval: Not less than 66% of the voting share; A higher threshold than 51%. The CoC approves the plan, and the Adjudicating Authority then approves it.
Withdrawal under section 12A: Approval by 90% of the voting share; Higher threshold. Section 25A(3A) proviso: for a section 12A vote, the authorised representative votes on individual instructions, not on the block majority.
Authorised representative: general rule: Vote each creditor's share as per its prior instructions; abstain for a creditor who gave none; Section 25A(1) and (3), including both provisos. The AR must not act against the creditor's interest.
Authorised representative: class under section 21(6A): Cast the whole block as decided by more than 50% of the voting share of those creditors who cast their vote; Section 25A(3A). The majority is counted among those who voted, not among all creditors in the class. Exception: section 12A applications.

How to solve Voting Rights and Decision Making in CoC questions

Use the same sequence for every question on CoC voting. It keeps you from missing a disqualified voter or a special rule.

1Identify the decision being voted on: ordinary decision, resolution plan approval, section 12A withdrawal, or another matter with its own threshold. This fixes the percentage.
2List the creditors and their financial debts. Remove operational creditors, directors and partners from the vote, and remove any related party creditor (apply the section 21(2) exception only if the facts fit it).
3Check whether any creditor is a class represented by an authorised representative under section 21(6A), or a consortium under section 21(6), and note how each votes.
4Compute each voting creditor's share: its debt ÷ total voting debt × 100. Total the shares to confirm they add up to 100%.
5For an authorised representative, apply section 25A. In general, vote per instructions and abstain for non-instructing creditors. For a section 21(6A) class, use the more than 50% rule among creditors who voted. For section 12A, use individual instructions.
6Add the shares voting in favour and compare with the threshold. Treat abstentions and absences as not in favour, because the test is on total voting share.
7Write the conclusion in the exam format: provision, application to facts, then a clear statement that the resolution is passed or not passed.
8Add one line on the next step, for example that an approved resolution plan goes to the Adjudicating Authority.

Quickest way: Three-line CoC vote check

When to use it: Use this for numerical questions where several creditors vote and you have under ten minutes.

Write the threshold first: 51%, 66% or 90%.
Cross out non-voters (related parties, operational creditors), then add the 'for' debts and divide by the total voting debt.
If a class AR is involved, first find the class decision (more than 50% of those who voted), then add the whole class block to the right side. Section 12A is the exception: split by instructions.

Common mistakes in Voting Rights and Decision Making in CoC

Treating every CoC decision as needing 66%.
The resolution plan threshold is the most famous number, so students apply it everywhere.
Fix: Remember the ladder: 51% for ordinary decisions under section 21(8), 66% for plan approval, 90% for section 12A withdrawal. Name the decision before you name the number.
Counting one vote per creditor.
Students carry over the idea of voting in a company meeting or a show of hands.
Fix: State that voting is by voting share based on financial debt owed (section 24(6)). Always compute percentages, never head counts.
Letting operational creditors or directors vote.
They get notice of meetings and can attend, so students assume they vote.
Fix: Quote section 24(4): directors, partners and one operational creditor representative may attend but have no right to vote. The CoC comprises financial creditors only.
Letting a related party financial creditor vote, or forgetting the exception.
Students remember either the bar or the exception, not both.
Fix: State the bar in section 21(2) first. Then state the narrow exception for a regulated financial creditor that is a related party solely because of debt-to-equity conversion or substitution, or other prescribed transactions, before the insolvency commencement date.
Saying the authorised representative votes as he thinks best.
Students see him as a trustee with discretion.
Fix: Under section 25A(3) he acts on prior instructions and must not act against the creditor's interest. If a creditor gave no instruction, he abstains for that creditor. The exception is the block rule in section 25A(3A) for section 21(6A) classes.
Applying the block-vote rule to a section 12A application.
Students stop reading after section 25A(3A) and miss its proviso.
Fix: Add the proviso: for a vote on a section 12A application, the AR votes according to section 25A(3), that is, per each creditor's own instructions.

Worked examples

Example 1

Alpha Steel Ltd is in CIRP. Its CoC has five financial creditors, all with voting rights, owed a total of ₹1,000 crore: Bank A ₹360 crore, Bank B ₹240 crore, Bank C ₹200 crore, Bank D ₹120 crore and Bank E ₹80 crore. A, B and E vote for a resolution plan. C and D vote against. Is the plan approved by the CoC? Would your answer change if E also voted against and the vote was on an ordinary procedural decision?

Show the solution

The decision is approval of a resolution plan, so the threshold is not less than 66% of the voting share.
Voting shares: A 360 ÷ 1,000 = 36%; B 24%; C 20%; D 12%; E 8%. The total is 100%.
Votes in favour: A + B + E = 36% + 24% + 8% = 68%.
68% is not less than 66%, so the plan is approved by the CoC. It still needs approval by the Adjudicating Authority.
Variation: if E votes against, those in favour are A + B = 36% + 24% = 60%. That is below 66%, so a plan would fail.
For an ordinary decision under section 21(8), the threshold is 51%. 60% is not less than 51%, so such a decision would pass.

Answer: The plan is approved by the CoC with 68% of the voting share, against the 66% needed. If E voted against, 60% would fail the plan threshold but would still pass an ordinary decision, which needs not less than 51%.

Example 2

In the CIRP of Beta Homes Ltd, an authorised representative appointed under section 21(6A) represents allottees whose financial debt totals ₹20 crore. Of this, creditors owed ₹10 crore instructed him to vote for a resolution, creditors owed ₹6 crore instructed him to vote against, and creditors owed ₹4 crore gave no instructions. How must he vote on an ordinary CoC resolution? How would it differ if the vote was on a section 12A withdrawal application?

Show the solution

The class falls under section 21(6A), so section 25A(3A) applies to an ordinary resolution.
The decision is taken by a vote of more than 50% of the voting share of those creditors who have cast their vote.
Creditors who cast votes hold ₹10 crore + ₹6 crore = ₹16 crore. The ₹4 crore that gave no instructions is not counted.
Share in favour: 10 ÷ 16 = 62.5%, which is more than 50%.
The AR therefore casts the votes of all the creditors he represents, the whole ₹20 crore block, in favour.
For a section 12A application, the proviso to section 25A(3A) sends him back to section 25A(3). He votes each creditor's share per its own instructions: ₹10 crore for and ₹6 crore against.
For the ₹4 crore with no instructions, the second proviso to section 25A(3) requires him to abstain.

Answer: On an ordinary resolution he casts the entire ₹20 crore block in favour, since 62.5% of those who voted supported it. On a section 12A application he splits the vote: ₹10 crore for, ₹6 crore against, and abstains for ₹4 crore.

Exam tips

Open every answer with the decision type and its threshold: 51%, 66% or 90%. Examiners usually test whether you chose the right number.
Show the voting share arithmetic in a short list. Marks go to correct percentages and a clear comparison with the threshold.
In authorised representative questions, check whether the facts say section 12A. If they do, the block rule does not apply.
Check every creditor for related party status and whether it is a financial creditor before you add anything up.
Keep the conclusion in three parts: the provision, the facts applied, and a one-line decision. Mention the next step, such as Adjudicating Authority approval, if the question is about a plan.

Practice questions from Convening and Conduct of Meetings of Committee of Creditors

Voting Rights and Decision Making in CoC in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

CMA IntermediateVoting Rights of Shareholders (Section 47)

Voting Rights and Decision Making in CoC: frequently asked questions

What is the voting threshold in the CoC for approving a resolution plan?

A resolution plan needs approval by not less than 66% of the voting share of the financial creditors. Ordinary CoC decisions need not less than 51% under section 21(8). The 66% rule applies to plan approval, so do not use it for every decision.

How is voting share calculated in the CoC?

It is based on the financial debt owed to each creditor, as section 24(6) says. The resolution professional determines it in the manner specified by the Board (section 24(7)). In an exam, divide each voting creditor's debt by the total debt of voting creditors and express it as a percentage.

Who votes for a class of creditors such as depositors or debenture holders?

An authorised representative votes on their behalf under section 21(6A). Where the debt is in securities or deposits and the terms provide for a trustee or agent, that trustee or agent acts. In other large classes, an insolvency professional appointed by the Adjudicating Authority acts. A guardian, executor or administrator acts for creditors they represent.

Can an authorised representative vote against what creditors want?

No. Under section 25A(3) he must act in accordance with prior instructions and never against the creditor's interest. If a creditor gives no instructions, he abstains for that creditor. For a section 21(6A) class, section 25A(3A) lets him cast the whole block as decided by more than 50% of the voting share of those who voted, except on a section 12A application.

Do operational creditors vote in the CoC?

No. The CoC comprises financial creditors. Under section 24, operational creditors whose aggregate dues are at least 10% of the debt get notice, and one representative may attend, but there is no right to vote.